Sunshine Oilsands Ltd.

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HKSE Stock Code: 2012 TSX Symbol: SUO January 2013 Forward-Looking Information and Disclaimer This presentation (the Presentation ) contains forward-looking information relating to, among other things:
HKSE Stock Code: 2012 TSX Symbol: SUO January 2013 Forward-Looking Information and Disclaimer This presentation (the Presentation ) contains forward-looking information relating to, among other things: (a) the future financial performance and objectives of ( Sunshine or the Corporation ); and (b) the plans and expectations of the Corporation. Such forward-looking information is subject to various risks, uncertainties and other factors. All statements other than statements and information of historical fact are forwardlooking statements. The use of words such as estimate, forecast, expect, project, plan, target, vision, goal, outlook, may, will, should, believe, intend, anticipate, potential, and similar expressions are intended to identify forward-looking statements. Forward-looking statements are based on Sunshine s experience, current beliefs, assumptions, information and perception of historical trends available to Sunshine, and are subject to a variety of risks and uncertainties including, but not limited to those associated with resource definition and expected reserves and contingent and prospective resources estimates, unanticipated costs and expenses, regulatory approval, fluctuating oil and gas prices, expected future production, the ability to access sufficient capital to finance future development and credit risks, changes in Alberta s regulatory framework, including changes to regulatory approval process and land-use designations, royalty, tax, environmental, greenhouse gas, carbon and other laws or regulations and the impact thereof and the costs associated with compliance. Although Sunshine believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. Readers are cautioned that the assumptions and factors discussed in this Presentation are not exhaustive and readers are not to place undue reliance on forward-looking statements as our actual results may differ materially from those expressed or implied. Sunshine disclaims any intention or obligation to update or revise any forward-looking statements as a result of new information, future events or otherwise, subsequent to the date of this Presentation, except as required under applicable securities legislation. The forward-looking statements speak only as of the date of this announcement and are expressly qualified by these cautionary statements. Readers are cautioned that the foregoing lists are not exhaustive and are made as at the date hereof. For a full discussion of our material risk factors, see Risk Factors in our most recent Annual Information Form, Risk Management in our current MD&A for the year ended December 31, 2011 and risk factors described in other documents we file from time to time with securities regulatory authorities, all of which are available on the Hong Kong Stock Exchange at on the SEDAR website at or our website at January 2013 Confidential 1 OIL & GAS INFORMATION The contingent resources estimates, effective May 31, 2012, and the discovered bitumen initially-in-place estimates, effective May 31, 2012, were prepared by GLJ Petroleum Consultants Limited and DeGolyer and McNaughton Canada Limited, independent qualified reserves evaluators, and are based on definitions contained in the Canadian Oil and Gas Evaluation Handbook (COGEH). For further discussion regarding our: (i) contingent resources, see our current Annual Information Form; and (ii) our total bitumen initially-in-place and all subcategories thereof, see our July 5, 2012 news release, both available on SEDAR at and at Actual resources may be greater than or less than the estimates provided. Discovered Bitumen Initially-In-Place is that quantity of bitumen that is estimated, as of a given date, to be contained in known accumulations prior to production. The recoverable portion of discovered bitumen initially-in-place includes production, reserves, and contingent resources; the remainder is categorized as unrecoverable. BIIP estimates include unrecoverable volumes and are not an estimate of the volume of the substances that will ultimately be recovered. There is no certainty that it will be commercially viable to produce any portion of the estimate. Contingent Resources are those quantities of bitumen estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies may include such factors as economic, legal, environmental, political and regulatory matters or a lack of markets. It is also appropriate to classify as contingent resources the estimated discovered recoverable quantities associated with a project in the early evaluation stage. The estimate of contingent resources has not been adjusted for risk based on the chance of development. Economic contingent resources are those contingent resources that are currently economically recoverable based on specific forecasts of commodity prices and costs. In Sunshine s case, contingent resources were evaluated using commodity price assumptions dated April, 2012, which comply with NI requirements. Best estimate is considered to be the best estimate of the quantity of resources that will actually be recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate. Those resources that fall within the best estimate have a 50% confidence level that the actual quantities recovered will equal or exceed the estimate. Contingent resources are estimated using volumetric calculations of the in-place quantities, combined with performance from analog reservoirs. Contingencies which must be overcome to enable the reclassification of contingent resources as reserves can be categorized as economic, non-technical and technical. The COGEH handbook identifies non-technical contingencies as legal, environmental, political and regulatory matters or a lack of markets. The contingencies applicable to our contingent resources are not categorized as economic and for the most part are due to regulatory approval of development projects at our properties, partner sanction and adequate capital funding within five years. To the extent that PV10% values are presented herein, only positive PV10% values and the associated resource barrels are reported herein for each region and classification category. In some scenarios, the low case estimate indicates a 0 value indicating that there are uneconomic results (negative PV10%) and the company would not proceed with development. This is consistent with reporting in the company s independent resource reports and COGEH guidelines that specify that contingent resources must be economic under current pricing. Additional information relating to our oil sands reserves and resources is presented in our current AIF, available at and on our website at RESERVOIR CHARACTERISTICS: The reservoir characteristics of our properties vary among the different properties and in comparison to other producing projects in McMurray or other formations. The reservoir we are proposing to produce has had little thermally stimulated production to date, although there are several commercial projects announced or in early stage of development. There is no guarantee that our steam oil ratio will be equivalent to those ratios in the McMurray or other formations which are currently producing. There is a risk that the recovery of bitumen will be lower in our projects than in projects in other reservoirs that have been used as analogues to produce the contingent resources in our technical report, because the reservoir characteristics are different although management believes that these differences have been taken into account. NET ASSET VALUE: With respect to the particular month being valued, the net asset value (NAV) disclosed herein is based on the number of issued and outstanding Sunshine common shares adjusted for the dilutive effect of stock options or other contracts as at the specified month. We calculate NAV as an average of: (i) our average trading price for the specific month; (ii) an average of net asset values; and (iii) an average of two net asset values based primarily on discounted cash flows of independently evaluated reserves, resources and using internal corporate costs, with one based on constant prices and costs and one based on forecast prices and costs. NON-GAAP MEASURES: This presentation may contain references to non-gaap measures as identified herein. These measures have been described and presented in order to provide shareholders and potential investors with additional information regarding Sunshine liquidity and its ability to generate funds to finance its operations. Readers are encouraged to review our most recent Management s Discussion and Analysis, available at or on our website at for a full discussion of the use of each measure. January 2013 Confidential 2 Highlights One of the largest holders of Oil Sands Leases in the Athabasca Region with 1.2 million acres and ~70 Billion Barrels of Total Petroleum-Initially-in-Place We are a Major Developer of Oil Sands Resources, targeting 300,000 bbl/d Production from our first three project areas and 1 million bbl/d Capability Our Management and Technical Teams Have Extensive Experience in Oil Sands Project Development and Execution to Production We are Supported by Several Prominent Asian Entities such as Sinopec, China Investment Corporation, Bank of China, China Life and Orient Group, as well as North American Institutions such as EIG and Retail Pure play focused on Insitu Oil Sands Canada Holds the 3rd Largest Oil Reserves in World Represents ~52% of the World s Investible and Accessible Oil Reserves Canada s Oil Sands Have Attracted Significant Investment due to its Low Geopolitical Risk, Stable Fiscal Regime and Welcoming Investment Policies Oil Sands are Expected to be a Major Contributor to Global Oil Supply ~4.2 Million Barrels per Day of Production Expected by 2025 The Alberta Government has initiated the Lower Athabasca Regional Plan 2012 that would see Sunshine and other oil sands lease holders releasing land and leases for current and future environmental management. Release criteria and compensation to be determined. January 2013 Confidential 3 Corporate Profile Founded in Alberta in 2007 Dual Listing in Hong Kong and Toronto (1) Shares Outstanding (1) : 2,823,880,881 C$ HK$ Market Cap: 0.9 billion 7.6 billion Enterprise Value (2) : 0.7 billion 5.2 billion PV10 P+P: 0.9 billion 7.1 billion PV10 Best Estimate Contingent Resources: 6.9 billion 53 billion 54% Ownership of Major Shareholders 3% 3% 6% 10% 7% 8.5% 8.5% EIG Management Company Cross-Strait Common Development Fund China Life Insurance Bank of China China Investment Corporation Sinopec Orient International Resources Other Notes Value Opportunity: C$/sh HK$/sh PV10 (3) Recoverable Resource Current Trading Price (4) Price/NAV 14.5% 1. Stock price and shares outstanding can be found on the Stock Exchange of Hong Kong Limited website: or on the Toronto Stock Exchange website: SUO 2. Enterprise Value = Market Capitalization + Debt Cash 3. Based on Sunshine s Competent Persons Reports dated May All figures are denominated in C$ millions; Recoverable Resources defined as 2P Reserves + Best Estimate Contingent Resources 4. As Jan 3, 2013 Closing Price (HKD Exchange rate of ) CDN $200 Million Syndicated Credit Facility CDN $200 million syndicated credit facility closed on October 11, Oversubscribed and increased by an additional CDN$75 million The co-lead institutions that arranged the credit facility were Alberta Treasury Branches and Bank of China, supported by Bank of America, HSBC, Morgan Stanley, Scotiabank, Toronto-Dominion, UBS and Industrial Commercial Bank of China January 2013 Confidential 4 Resource Base Provides Significant Growth Opportunity ~70 Billion Barrels of Total Oil in Place; 1.2 MM acres; P+P Reserves 445 million bbls +Best Estimate Contingent 4.96 billion bbls Currently Less Than One Year From First Steam on First Commercial Development Production Capacity of 1MM bbls per day High Growth Portfolio of Assets Composed of Clastic and Carbonate Oil Sands Cc Ch T Su I Ce Sh B Cp Cn Sy H ~100% Ownership in All Leases (1) Assets Located Close to Several High Profile International Oil Companies Plans to Develop at Prudent Pace Reflecting a Strong Balance Sheet A K Sunshine s Oil Sands Leases Represent ~7% of Granted Leases in the Athabasca Oil Sands Region Notes 1. With the exception of shared formations which represent 0.7% of total land holdings January 2013 Confidential 5 Operational Accomplishments Recoverable Resources (Bn bbl) (1) 6 Track Record of Building Scale Acres (2) 2,000,000 Recent Developments First 10,000 bbl/d SAGD phase at West Ells approved and under construction ,000,640 1,000,640 1,085,747 1,156,377 1,189, ,800,000 1,600,000 1,400,000 1,200,000 1,000,000 West Ells under construction as at June 30, 2012 Procurement of long lead equipment 100% complete Secondary equipment 90% complete Filed regulatory application for a 10,000 bbl/d SAGD phase at Thickwood Filed regulatory application for a 10,000 bbl/d SAGD phase at Legend Lake Planning two commercial applications to be filed in 2013 to expand capacity to an estimate of 300,000 bbl/d Source 107, Best Estimate Contingent 2P Reserves Land Position Note 1. Recoverable resource defined as 2P Reserves + Best Estimate Contingent Resources 2. 1 Hectare = acres; we currently hold 467,969 hectares of leases (including all Oil Sands Leases and PNG Licenses) , , , ,000 - Progressing alliance / joint venture arrangements with Sinopec/China Investment Corp and others Progressing carbonate development plans for commercial applications Project Area Environmental Impact Assessments for West Ells, Legend Lake & Thickwood are underway, and detailed baseline environmental data collection is expected to be complete by Q Pursuing cold flow developments at Muskwa, Harper, Goffer, Godin and others Updated Reserve/Resource Report (May 31, 2012) January 2013 Confidential 6 Reserves and Resources Progression Reserves and Resources Notes 1. Based on Sunshine s Competent Persons Reports dated May As at Jan 3, 2013 Closing Price (HKD Exchange rate of ) PV10 (1) PV10/sh (2) 1P Reserves 80 million C$312 million C$0.11 2P Reserves 445 million C$918 million C$0.33 3P Reserves 603 million C$1.6 billion C$0.57 Low Estimate Contingent Resource Best Estimate Contingent Resource High Estimate Contingent Resource 2P+ Best Estimate Contingent Resource 1.9 billion C$2.5 billion C$ billion C$6.9 billion C$ billion C$19.1 billion C$ billion C$7.8 billion C$2.75 HK$ MM P+P Reserves Progression CAGR* = 101% (2P Resources) *CAGR calculated from 2010 to 2012 Contingent Resource Progression CAGR* = 40% (Best Estimate Contingent) 0 MM/Bbl Low Best High *CAGR calculated from 2009 to 2012 January 2013 Confidential 7 Hold ~70 Billion Barrels of Total Petroleum-Initially-in-Place Summary of Our Asset Portfolio (1) Property / Asset Type First Steam * Ultimate Capacity * (bbl/d) Total Petroleum- Initially-in-Place (1) Recoverable Resources (MMbbl) (MMbbl) PV10 (C$MM) (2) West Ells ,000 1, ,248 Thickwood ,000 1, Legend Lake ,000 1, Other Clastics 200,000 17,806 2,152 2,163 Total Clastics 400,000 22,695 4,050 6,022 Harper Carbonates 200,000 10, Other Carbonates 400,000 35, ,599 Total Carbonates ,000 46,130 1,345 1,739 Muskwa Cold Flow Currently Producing Total Combined 1,100,000 68,894 5,400 7,775 Base Case Clastic Assets * Management Estimates for First Steam and Capacity Note 1. Based on Sunshine s Competent Persons Reports dated May All figures are denominated in C$ millions; Recoverable Resources defined as 2P Reserves + Best Estimate Contingent Resources 2. Pre-Tax PV10% incorporate GLJ s April 2012 commodity price forecast s and D&M s April 2012 commodity price forecast January 2013 Confidential 8 2012 Reserves and Resource Assessment Note Based on Sunshine s Competent Persons Reports dated May All Pre Tax PV10 figures are in C$ millions; Pre-Tax PV10% incorporate GLJ s April 2012 commodity price forecasts and D&M s April 2012 commodity price forecast All Reserves and Resources are in MMbbls January 2013 Confidential 9 Accelerated Base Clastic Assets Additional Clastic Assets Production Capacity (bopd) Carbonates Clastic and Carbonate Combined Capacity Note: Recoverable Resources defined as 2P Reserves + Best Estimate Contingent Resources as per GLJ and D&M May The above Combined Capacity and Production Curves are defined as follows: Sunshine has identified development potential for an estimated 1,100,000 bopd production capacity by 2026, each project type is identified as either accelerated base case clastics, other additional clastics or carbonates. The colored segments show the production capacity of the assets; The Base Case Clastics at West Ells, Legend Lake and Thickwood are based on accelerated corporate development plan to reach production capacity of an estimated 300,000 bopd by 2025; Additional Clastic Development Assets are based on the Competent Persons best estimate contingent resource development plans, with an additional production capacity potential of 190,000 bopd by 2026; The Carbonate unconstrained development plan reaches production capacity of an estimated 580,000 bopd by January 2013 Confidential 10 Combined Cash Flow Forecast Full Development Plan Millions $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $- $(1,000) $(2,000) $(3,000) Years Accelerated ~1,000,000 BPD Cash Flow Assumptions: WTI - US$ $ Natural gas - AECO CAD$ $ 5.10 Cash flow netbacks - $/bbl: - pre-payout $ post-payout $ Capital expenditures ($/boe/d): Clastics $ 33,766 Carbonates $ 35,608 Sustaining Capital (per bbl) $ Peak daily production (boe/d): West Ells, Thickwood & Legend Lake 200,000 Other Clastics 195,000 Carbonates 581, ,336 Notes 1. Assumes a US$/C$ exchange rate of Crown royalties are based on net revenue royalty on a post-payout basis, including an average sustaining capital cost of C$8.75/bbl 3. GLJ April 1, 2012 price deck used 4. Heavy oil difference18.5% January 2013 Confidential 11 West Ells, Thickwood & Legend Lake Base Case Project Schedule (Base Case Clastic Assets) 300,000 bbl/d Installed Capacity by 2025 (1) SAGD Facilities bbl/d West Ells A1 5,000 West Ells A2 5,000 West Ells A3 30,000 West Ells C1 30,000 West Ells C2 30,000 West Ells B 20,000 Thickwood A1 10,000 Thickwood A2 30,000 Thickwood B 30,000 Capacity Legend Lake A1 20,000 Legend Lake A2 30,000 Legend Lake B1 30,000 Legend Lake B2 30,000 Total 300,000 Delineation Drilling & Regulatory Preparation Regulatory Approval Construction First Steam 1. Base Case Clastic Assets defined as West Ells, Thickwood and Legend Lake January 2013 Confidential 12 West Ells, Thickwood & Legend Lake Base Case & Accelerated January 2013 Confidential 13 West Ells Development 796 million barrels of 2P + Best Estimate Contingent Resources West Ells Initial Development Area ~24,000 acres capable of 120,000 bbl/d production rate Regulatory approval received and construction commenced on 10,000 bbl/d project First steam expected mid-year 2013 Using a 5 th generation SAGD plant design Close to other oil sands leases including Athabasca / CNPC Dover Steam Chief and key operators employed developing Commissioning, Start Up & Operation Procedures completed Engineering, Design, Equipment procurement & fabrication on schedule Source Source (as of July 2012) 10+m Net Continuous Bitumen 20m Net Continuous Bitumen 15+m Net Continuous Bitumen SAGD Facility January 2013 Confidential 14 West Ells Development Engineering Schematic West Ells SAGD Facility Produced Water Exchange Building Motor Control Centre Building West Tank Building East Tank Building Boil
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